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Markets still falling like whoa


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  On 8/31/2019 at 3:37 AM, atomheartbevo said:

He's going to make a go of firing Powell, with a bonus of really fucking with our stock prices, within the next few weeks, isn't he?

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No way he fires Powell because that would take balls.  This will play out the same way he was going to fire Mueller... lots of whining on Twitter and absolutely no action.

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  On 8/31/2019 at 1:26 PM, Fudge Nuggets said:

No way he fires Powell because that would take balls.  This will play out the same way he was going to fire Mueller... lots of whining on Twitter and absolutely no action.

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Tariffs are starting to kick in this weekend though.  He’s hoping that the companies are going to eat the costs.  That’s an action that’s going to negatively affect the economy.  

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  On 8/31/2019 at 3:45 PM, atomheartbevo said:

Tariffs are starting to kick in this weekend though.  He’s hoping that the companies are going to eat the costs.  That’s an action that’s going to negatively affect the economy.  

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Yeah, it seems like the choice is either inflationary or recessionary 

Either one now will be blamed on the Fed

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  On 8/31/2019 at 3:45 PM, atomheartbevo said:

Tariffs are starting to kick in this weekend though.  He’s hoping that the companies are going to eat the costs.  That’s an action that’s going to negatively affect the economy.  

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There could be so many results of these tariffs:

  • American companies can make Chinese suppliers eat most of the cost(which some American companies are doing).
  • Some companies like Apple are already getting exceptions so no to minimal impact.
  • China devalues their currency further which seems to be the likely weapon of choice for China. But it doesn't impact the American consumer which forms 2/3rds of American economy. It impacts American companies that have sales in China but its negligible depending on how much they devalue. 

It seems that the negative impact is overblown. The market probably is aware of it which is why it keeps hovering around all time highs.

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  On 8/31/2019 at 4:28 PM, hornhorn said:

Some companies like Apple are already getting exceptions so no to minimal impact.

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I could be reading it wrong, but Apple's 15% phone tariffs got pushed back to December, but the 30% tariffs for the computers and accessories are kicking in tomorrow.  Apple is not going to eat 30%, and I doubt FoxConn, etc. are willing to eat that either.  Well, I suppose the workers who die from exhaustion could be ground up into Soylent Green, and that would help offset both disposal and food costs, but still, 30% is quite a bit.

They may eat some of that, but prices are going to go up for consumers, even if it's only 10% or 20%.

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  On 8/31/2019 at 5:44 PM, atomheartbevo said:

I could be reading it wrong, but Apple's 15% phone tariffs got pushed back to December, but the 30% tariffs for the computers and accessories are kicking in tomorrow.  Apple is not going to eat 30%, and I doubt FoxConn, etc. are willing to eat that either.  Well, I suppose the workers who die from exhaustion could be ground up into Soylent Green, and that would help offset both disposal and food costs, but still, 30% is quite a bit.

They may eat some of that, but prices are going to go up for consumers, even if it's only 10% or 20%.

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I think I read somewhere about Apple getting an exemption but if they don't then yes they will be paying 15% on Sep 1st(which Apple will likely absorb according to many analysts), 30% on Oct 1st which they will pass on to the consumers and then another round in Dec. 

It seems Apple is more at risk on Oct 1st deadline than tomorrow. 

 

  Reveal hidden contents

https://www.reuters.com/article/us-usa-trade-tariffs-factbox/factbox-next-rounds-of-trumps-tariffs-on-chinese-goods-to-hit-consumers-idUSKCN1VL0EX

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  On 8/31/2019 at 3:37 AM, atomheartbevo said:

He's going to make a go of firing Powell, with a bonus of really fucking with our stock prices, within the next few weeks, isn't he?

And a shitload of tariffs are kicking in over the weekend, and there's no way most of the companies being hit are going to eat those costs.

 

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If anyone knows how to badly manage a company into bankruptcy, it’s him

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  On 8/24/2019 at 12:43 AM, Reagan1k said:

This made me laugh (from OP/ED)

— Adam Neumann has sold $700 million in stock. As a founder, I've sold shares into a secondary offering to get some liquidity and diversify holdings. Ok, I get it. But 3/4 of a billion dollars? This is 700 million red flags that spell words on the field of a football field at halftime: "Get me the hell out of this stock, but YOU should buy some."

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WeWork ipo looking for $20-30bn valuation, vs $47bn a few weeks back.  This thing is gonna flop 

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  On 9/5/2019 at 6:55 PM, Bozo_Casanova said:

I'm not in real estate, but I'm pretty familiar with the economics of coworking spaces and I have never understood how WeWork or any company that operates as a coworking facility in Class A office space that it does not own free and clear can ever turn a profit by conventional metrics. 

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They can't, and they won't.  I'd give WeWork about 6 years before they file, 3 if we have a major economic downturn.  

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  On 9/5/2019 at 6:55 PM, Bozo_Casanova said:

I'm not in real estate, but I'm pretty familiar with the economics of coworking spaces and I have never understood how WeWork or any company that operates as a coworking facility in Class A office space that it does not own free and clear can ever turn a profit by conventional metrics. 

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Because...... PowerPoint and trademarks.

One doesn't need to turn a profit when you have synergy among your planetary companions.

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  On 9/5/2019 at 6:55 PM, Bozo_Casanova said:

I'm not in real estate, but I'm pretty familiar with the economics of coworking spaces and I have never understood how WeWork or any company that operates as a coworking facility in Class A office space that it does not own free and clear can ever turn a profit by conventional metrics. 

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Step 1: Get somebody to pump money into your co-working spaces venture

Step 2: Buy some desirable buildings in various cities, set them up for co-working spaces

Step 3: Do the co-working spaces business for 5-10 years

Step 4: Announce you're closing the company, sell all of those desirable buildings that, in theory, went up in nicely in value over the 5-10 years you were collecting rent from co-working.

Is that how it works?

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  On 9/5/2019 at 6:55 PM, Bozo_Casanova said:

I'm not in real estate, but I'm pretty familiar with the economics of coworking spaces and I have never understood how WeWork or any company that operates as a coworking facility in Class A office space that it does not own free and clear can ever turn a profit by conventional metrics. 

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I know nothing about it other than as a tenant in Class A space.

First question:  do they really use Class A space?

Second:  Executive Suites like Regus apparently make money by charging more psf than their lease by leasing less sf than anyone else would.  

Third:  Isn't WeWork basically Regus without selling actual offices, just desk space, so they can further leverage their leased space.

FInally:  The only magic I see in it is that WeWork has somehow convinced millennial types that paying 50+ psf for space in a glorified cube farm is a great and desirable thing, because collaboration or some shit.  It would seem that competition would decimate this idea in fairly short order.  Not to mention people just waking the fuck up.

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  On 9/5/2019 at 7:17 PM, TwiceHorn said:

So, Michael Burry thinks ETFs are creating a large cap bubble.  What do we think of this?

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I read that too but didn't take away that he thought it was a large cap bubble - rather an overall bubble due to passive assets holding so many securities with no liquidity (based on their average daily volume).

It's something I hadn't really considered prior....the lack of non-index activity in a majority of the issues which some of the biggest indexes hold.

Basically everybody is forced to sell everything and there is no demand for a lot of these issues outside of the Indexes themselves.

Pretty interesting.....Not sure I'd want to bet against him.

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In the Russell 2000 Index, for instance, the vast majority of stocks are lower volume, lower value-traded stocks. Today I counted 1,049 stocks that traded less than $5 million in value during the day. That is over half, and almost half of those -- 456 stocks -- traded less than $1 million during the day. Yet through indexation and passive investing, hundreds of billions are linked to stocks like this.

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  On 9/5/2019 at 7:20 PM, atomheartbevo said:

Step 1: Get somebody to pump money into your co-working spaces venture

Step 2: Buy some desirable buildings in various cities, set them up for co-working spaces

Step 3: Do the co-working spaces business for 5-10 years

Step 4: Announce you're closing the company, sell all of those desirable buildings that, in theory, went up in nicely in value over the 5-10 years you were collecting rent from co-working.

Is that how it works?

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Everybody_works_but_the_vacant_lot_(crop

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  On 9/5/2019 at 7:17 PM, TwiceHorn said:

So, Michael Burry thinks ETFs are creating a large cap bubble.  What do we think of this?

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I know he's a lot smarter than I am and pay attention to stuff he says.  Of course I also think Jim Chanos is one of the smartest mf'ers on earth but he has been wrong about shorting China going on nine years now.

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  On 9/5/2019 at 5:35 PM, Trey3216 said:

WeWork ipo looking for $20-30bn valuation, vs $47bn a few weeks back.  This thing is gonna flop 

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  On 9/5/2019 at 6:55 PM, Bozo_Casanova said:

I'm not in real estate, but I'm pretty familiar with the economics of coworking spaces and I have never understood how WeWork or any company that operates as a coworking facility in Class A office space that it does not own free and clear can ever turn a profit by conventional metrics. 

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Maybe if WeWork will become the Pets.com of this bubble.
We are in a bubble, right?
Worst thing about bubbles is you can be right about the bubble but go broke betting against it because you really can't predict when or what will cause the bubble to pop (or significantly deflate)

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  On 9/5/2019 at 7:24 PM, TwiceHorn said:

FInally:  The only magic I see in it is that WeWork has somehow convinced millennial types that paying 50+ psf for space in a glorified cube farm is a great and desirable thing, because collaboration or some shit.  It would seem that competition would decimate this idea in fairly short order.  Not to mention people just waking the fuck up.

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They figured out that those millennial types would rather hang around each other and get their free fruit juices and candy bars, than save their money and work at a table in a public library, Starbucks, Central Market, various little coffee shops, etc.  Probably because the millennial types don't want to encounter a homeless person, dirty tables, or dirty glances from the waiters.

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From the outside I have seen Co-work spaces provide some good value for “one-man show” outfits when they share a space with some complimentary counterparts(architects and designers) that do well being near each other daily but don’t want to take on a bunch of overhead.  

Now admittedly that is fairly unique, and not a “disruptive” business proposition.

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  On 9/6/2019 at 1:28 AM, 3adays said:

I’d be curious to see a breakdown of WeWork’s occupants. Obviously you have plenty of “one-man show” outfits and startups,  but there is a significant number of corporations renting these spaces as well. 

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I’m imagining a bunch of freelance graphic designers and social media marketing firms competing against each other. 

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  On 9/6/2019 at 1:28 AM, 3adays said:

I’d be curious to see a breakdown of WeWork’s occupants. Obviously you have plenty of “one-man show” outfits and startups,  but there is a significant number of corporations renting these spaces as well. 

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Wont they have to release most of that during the IPO process?  

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  On 9/6/2019 at 1:28 AM, 3adays said:

I’d be curious to see a breakdown of WeWork’s occupants. Obviously you have plenty of “one-man show” outfits and startups,  but there is a significant number of corporations renting these spaces as well. 

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Wont they have to release most of that during the IPO process?  

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  On 9/6/2019 at 1:42 AM, SDG said:

Does WeWork allow you to use a corporate physical address?  If so, there’s some value from a business card perspective, but as someone who works from home regularly im not driving to a place with no coworkers.  

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Yeah, I've thought about doing it in the past, but it's like I'm a 10 minute walk to a Central Market, a Starbucks, and a few other places, all of which I can get something to eat at and have interesting scenery.

Then again, I'm not spending 8 hours at any of those places.  But still.

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  On 9/6/2019 at 1:36 AM, Trey3216 said:

I’m imagining a bunch of freelance graphic designers and social media marketing firms competing against each other. 

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There seems to be a fair amount of large corporations and startups who are in growth mode, but in between leases or completing construction that are taking these spaces. WeWork will take 3 floors of the new SXSW building at Lavaca. Are there really that many graphic designers and social media experts out there to fill this? 

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  On 9/5/2019 at 7:17 PM, TwiceHorn said:

So, Michael Burry thinks ETFs are creating a large cap bubble.  What do we think of this?

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  On 9/5/2019 at 7:22 PM, TonyTexas said:

Time to bale. 

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  On 9/5/2019 at 7:38 PM, Reagan1k said:

I read that too but didn't take away that he thought it was a large cap bubble - rather an overall bubble due to passive assets holding so many securities with no liquidity (based on their average daily volume).

It's something I hadn't really considered prior....the lack of non-index activity in a majority of the issues which some of the biggest indexes hold.

Basically everybody is forced to sell everything and there is no demand for a lot of these issues outside of the Indexes themselves.

Pretty interesting.....Not sure I'd want to bet against him.

 

 

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Interesting timing for these posts, and I remember Bogle commenting about trading in individual stocks becoming thin as more and more money flows into index ETF's and mutual funds.

The interesting timing part is that last night I received the following notice, related to a Small Cap fund which I own but that I also have put options on - I am hedged, but can fully cover the put if it were to exercise (which it won't because I plan on selling it before it gets too close to expiration because theta can eat your profits if you let it). I've had this holding in my account for probably 10 years and have had puts on it for the last year (made some/lost some on those puts, but have never received this notice before)
I think it is just the brokerage firms way of letting me know they can completely screw me over, if I let them.

  Quote
Option exercise or assignment may trigger fee
If the option position(s) shown below results in a short position(s) through option assignment or exercise, a stock borrow fee may be charged because the underlying shares are currently classified as hard to borrow.
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I guess boiling doing his theory into bar room talk you get -

Most of the shit these index funds own are only bought by the index funds themselves b/c they have to - so when the index funds sell off there ain't no one on the other side of the teller window.

Therein lies the bubble - companies who's market cap has nothing to do with intrinsic value of the enterprise.

Being tied to a popular index for these companies is akin to having .com in your name on 3/10/2000.

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  On 9/6/2019 at 1:11 PM, Reagan1k said:

I guess boiling doing his theory into bar room talk you get -

Most of the shit these index funds own are only bought by the index funds themselves b/c they have to - so when the index funds sell off there ain't no one on the other side of the teller window.

Therein lies the bubble - companies who's market cap has nothing to do with intrinsic value of the enterprise.

Being tied to a popular index for these companies is akin to having .com in your name on 3/10/2000.

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Yeah, the flow of funds into some of the index funds create imbalance and prices rise; if (and by that I mean when) those funds face an outflow they will have the potential to flood the market with sales and drive prices further down (reference death spiral) right to the point that things are oversold and institutions step in to buy the then undervalued stocks.

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  On 9/6/2019 at 1:42 AM, SDG said:

Does WeWork allow you to use a corporate physical address?  If so, there’s some value from a business card perspective, but as someone who works from home regularly im not driving to a place with no coworkers.  

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We rent around 5 floors from wework across various metro areas and this seems not uncommon but not too common. Given we have multiple floors in the same building, we use the address as our own. 

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  On 9/7/2019 at 10:15 PM, 52-80 said:

My only question is, why did the (presumably) smart folks at SoftBank throw even a penny at wework?

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SoftBank like many investment banks has a lot of capital it needs to deploy.  Parked money doesn’t make money.  M&A has been madness with banks battling and driving valuations to ridiculous levels in many cases.  

As of February SB had deployed 50B of 99B in their fund.  

 

 

 

Fuck, I need to drink more on this flight and post less serious shit   

 

 

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  On 9/8/2019 at 11:13 AM, ChiTownDoc said:

SoftBank like many investment banks has a lot of capital it needs to deploy.  Parked money doesn’t make money.  M&A has been madness with banks battling and driving valuations to ridiculous levels in many cases.  

As of February SB had deployed 50B of 99B in their fund. 

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So they want to put the money to use, but that is not an invitation to throw it away.  10B of that 50B is an outsized bet, and requires a bit more diligence than VC-style blessing of 100 companies, banking on 1 home-run.

 

(Hell, if they've got so much dormant money, they could always take it to my cousin Asadulah, who works in securities....) 

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